CompTIA Executive Compensation: Big Profits From Nonprofits

Four years ago a CRN investigative report revealed the Computing Technology Industry Association, better known as CompTIA, was paying high salaries to its top executives, including a controversial $1 million bonus to then-CEO John Venator in 2006, despite the association's status as a nonprofit and tax-exempt organization. Following that report, CompTIA made major changes to its leadership team, replacing virtually all top executives and board members with new faces.

But a new CRN investigation has revealed little if anything has changed about the way CompTIA operates. Case in point: Venator earned another million-dollar compensation package at CompTIA in 2009 -- a year after he had stepped down as chief executive.

Even under a new leadership team, CompTIA has continued to pay out the kind of compensation that earned the organization scrutiny four years ago.

BROKEN PROMISES

Even after Venator's 2006 bonus of $1 million came to light and CompTIA pledged to make changes to its compensation model, the organization's 990 tax returns indicate that not much actually changed, CRN found. In 2008, Venator earned a base salary of just $99,813 before stepping down as CEO on Sept. 1. But his total compensation for the year, which included a nearly $300,000 bonus, came to $754,233.

Plus, Venator earned an additional $319,292 in 2008 when he became the full-time chief executive of the CompTIA Educational Foundation, which the organization calls its "philanthropic arm" providing education, training and certification to at-risk individuals, veterans, minorities and other underserved groups.

In that role, Venator's compensation skyrocketed to $1.76 million in 2009. According to additional tax records, the CompTIA Educational Foundation, now renamed the Creating IT Futures Foundation, generated just $1.5 million in total revenue that year -- less than Venator's salary. Tax records for the CompTIA Educational Foundation indicate that prior to 2008 it had no full-time CEO or executive management. For example, 2007's 990 form shows the foundation's officers were CompTIA executives who received no additional compensation for their roles in the education foundation.

Venator's compensation is eye-popping, but other executives also have reaped big paychecks from CompTIA. In 2011, Venator's successor, Todd Thibodeaux, earned $924,550, slightly up from $920,331 in 2010, according to CompTIA's tax returns. At the same time, CompTIA saw its revenue plunge in 2011 to $46.9 million from $58.6 million in 2010 and the association actually posted a $2.3 million loss. As a comparison, Wayne LaPierre, executive vice president of another nonprofit -- the National Rifle Association -- made $972,000 in 2010; the NRA's revenue was $218.9 million.

CompTIA Executive Vice President Terry Erdle -- the organization's second-highest-paid executive that year -- saw his compensation jump to $635,520 in 2011 from $471,524 the year before.

When he succeeded Venator, Thibodeaux promised to move the organization in a fresh direction and change a lot of the practices of Venator's tenure, including the payment of lucrative bonuses. And in 2009, Thibodeaux's first full year as CEO, there wasn't a single bonus or incentive compensation paid to any CompTIA executive, according to the organization's tax returns for that year.

But the bonus ban didn't last long. In 2011, the organization paid out more than $1 million in total bonuses to its top eight executives, including the CEO. Thibodeaux was paid a $270,000 bonus on top of his $601,406 salary; Erdle, meanwhile, was paid a $239,750 bonus, which was more than half of his base salary of $353,316.

In an interview with CRN, Thibodeaux declined to talk specifics about CompTIA salaries or bonuses. But he did say CompTIA doesn't consider executive compensation to be any kind of issue and that the organization hasn't had to address the matter since the CRN report in 2009. He also stressed that CompTIA is transparent on the subject of compensation, citing its publicly available 990 tax returns.

NONPROFIT COMPARISON

So how does CompTIA's compensation -- particularly Venator's $1.7 million package -- compare to other nonprofits?

CRN put the question to Linda Lampkin, research director at the Economic Research Institute, which surveys salary, compensation and cost of living data for private companies and public organizations, including nonprofits. Lampkin analyzed the 2009 and 2010 CEO compensation of nearly 60 comparable nonprofits with revenue of between $50 million and $100 million; the mean for organizations in the $50 million to $60 million range was $330,728 -- far less than Venator's package or Thibodeaux's $920,331 in 2010 compensation.

"Are CompTIA executives highly paid? Absolutely," Lampkin said. "But are they too highly paid? That's up to the market -- CompTIA's members and board of directors -- to decide."

The "market"-- and not the IRS or federal government regulators -- determines what is considered excessive pay for groups such as CompTIA, Lampkin explained, because it's a 501(c)6 nonprofit and not a (c)3 or (c)4, which includes charities, religious organizations, social welfare groups and civic leagues. The 501(c)(6) nonprofit status is designated for business associations and trade groups that promote a particular industry. "The IRS doesn't have a lot of skin in the 501(c)6 game because there's no taxable revenue involved in those business associations," she said. "The IRS has to monitor those (c)3s and (c)4s by law because they affect so many tax dollars."

In other words, because CompTIA and other (c)6 organizations don't receive tax-deductible donations from private citizens, they aren't scrutinized by the government the same way that charities are. As a result, nonprofit business associations are often allowed to police themselves.

"If CompTIA's members and board of directors don't think they're getting their money's worth, they can leave or make a change," Lampkin said. "Once these groups attain nonprofit status, they have to do something really egregious to lose it."

In fact, other nonprofit IT trade groups also pay their top executives big salaries. For example, CTIA -- The Wireless Association President and CEO Steve Largent earned $1.1 million in 2010, when the group recorded $57.9 million in revenue.

THE MILLION-DOLLAR BONUS

For Venator, who started his tenure at CompTIA in 1990, the high compensation was reward for growing a small, little-known organization with less than $1 million in the bank into the best-known nonprofit association in the IT channel with $40 million in revenue 15 years later. Much of the group's success came from technical certifications, most notably the A+ certification for computer technicians. According to CompTIA, more than 800,000 people have earned the A+ certification since it was first introduced in 1993. [Disclosure: CompTIA and CRN have had business partnerships at various times, including co-hosting events and collaborating on the CompTIA IT Hall of Fame].

In 2006, Venator was richly rewarded for that success; he earned a $1 million bonus, boosting his compensation from $676,584 in 2005 to a whopping $1.7 million.

Venator talked candidly with CRN about his $1 million bonus and his compensation in general during his time at CompTIA. "There were no games played. The board laid out the goals and challenges, and we met them," he said in a recent interview. "At the time, I even asked the board -- are you sure you want to do this? And they said yes. They said I had no real pension plan and that I had earned it."

Jean Alexander, a former executive at CompTIA and current vice president of business development at the ASCII Group, defended Venator in a recent interview with CRN and said his compensation was well-earned. "John was big on setting big goals with big incentives," she said. "Every single one of those goals was based on stronger membership numbers, and he met those goals."

Venator said he doesn't recall the exact metrics or benchmarks for those goals, but they involved increasing the organization's official members and upping attendance for CompTIA's Breakaway event. And according to CompTIA's numbers for 2006, the organization had never been stronger: record revenue and more than 20,000 members worldwide, up from approximately 8,000 members in 2002.

But those numbers were somewhat misleading; CompTIA "members" are companies, and CompTIA's longtime methodology counted each company's location or branch office as a separate "member." In other words, a single solution provider company with five offices counted as five members, according to CompTIA, which significantly inflated the number of dues-paying VARs within the organization.

The year after Venator received the controversial bonus, however, the board of directors made an unexpected change and began counting companies as single entities, regardless of locations or branch offices, which drastically reduced the official number of members to just more than 2,000 companies worldwide, according to CompTIA's own data. For a comparison, there are an estimated 180,000 solution providers in North America, according to CRN research.

VENATOR: 'NO QUESTION I WAS PAID A LOT'

When asked about his 2009 compensation as head of the CompTIA Educational Foundation, Venator said that he and other longtime senior staff at CompTIA had received "legacy pay" in their final years with the organization. The legacy pay, he said, made up for a lack of compensation and benefits early in his tenure as well as a reward for his service to CompTIA over the years.

"It was the last full year of my contract with CompTIA," he said. "When I came there, we had no health insurance, no dental insurance, no pension and no [retirement] benefits, and we were that way for a number of years."

When Venator decided to step down as CEO of the association, he said he had grown weary of the travel and time commitments required to run the entire association. But he still wanted to be involved with CompTIA, so the board of directors at the time decided to move him over to the CompTIA Educational Foundation full-time. "It was CompTIA's gift to the foundation to allow me to move over and do what I do best, which is grow things and at the same time continue to receive compensation," Venator said.

A former CompTIA official familiar with the situation who wished to remain anonymous confirmed Venator's 2009 pay was not based on any performance metrics but instead was tied to his existing employee contract. "The [$1.7 million] salary was part of the payout of his contract," the source said. "The board had to pay him, so they moved him over to the educational fund where he could still be involved with CompTIA and get the rest of his compensation."

The source also said the new regime of board members and executives under Thibodeaux weren't in a position to change Venator's high compensation in 2009 because of the contract. "Some of the previous board members had been there a long time and they gave John a big compensation package," the source said. "I thought it was high but he had been there for 20 years, through thick and thin, and they rewarded him for that."

But details about which board members proposed the idea for this contact, as well as details about the length and the terms of the contract, remain murky. In CRN's 2009 investigation, former CompTIA Chairman David Smith said he had a third-party audit review the contract before the 2006 bonus was paid, but said a previous chairman and board has proposed and approved the contract.

Venator said he wasn't in the boardroom meetings when the contract was proposed or approved, and said he doesn't recall the specific details of the contract's exact length or worth.

"There's no question I was paid a lot," he said. "The board compensated me like most of them were compensated by their companies. They were mostly senior vice presidents and sales heads of major vendors, and they lived and died by whether or not they made that bottom line. That was how they treated me, and I made the bottom line for them."

Even though CompTIA was a nonprofit in the eyes of the government, the organization in many ways acted more like the leading IT vendors and distributors that had seats on the association's board. And that may explain why Venator's high compensation didn't make waves among even new executives and board members who hadn't been involved with Venator's contract.

Ed Korenman, former vice president of marketing and communications at CompTIA, joined the group in 2008 after Thibodeaux became CEO; Thibodeaux and Korenman had both worked at the Consumer Electronics Association (CEA) for a number of years. Korenman said Venator's $1.7 million salary in 2009 was actually common knowledge among association executives and board members, and that no one considered it controversial -- despite the fact that Venator's pay was more than double what Thibodeaux earned.

"Once Todd took over, John was pretty marginalized," he said. "People knew he was on his way out and that his pay was very high, but that whatever money he was making at that point was kind of a going-away package."

KEEPING UP WITH THE MARKET

Korenman, who left CompTIA last year and joined FusionStorm, a San Francisco-based solution provider, said despite the high-dollar figures, executive compensation was never considered a controversial topic inside CompTIA. "The compensation issues with John [Venator] and the 2009 CRN article were discussed at the time, but they were never seen as a big issue," he said.

The Economic Research Institute's Lampkin said business associations such as CompTIA sometimes pay salaries that are comparable to what those executives might earn at the private or public companies that sit on their boards.

"The argument usually is that someone running these industry associations could be running a private company of the same size in that industry," she said. "And sometimes that's true. These executives could go elsewhere and take a higher-paying job in the industry, so depending on who they are, that may be the reason for the high compensation."

Venator himself echoes that sentiment. "I had several job offers to go work for [other] companies, but for a variety of reasons I chose not to do that," he said. "CompTIA also engaged with outside consultants to measure the compensation of our people and look at what their competitive skills were worth if they worked for IBM or CompuCom or other companies like that. And every time the board went to outside consultants over the 20-plus years I was there, they came back and said, 'You're OK.' "

After earning $1.7 million in 2009, Venator earned an additional $853,709 for his abbreviated tenure as CEO of the CompTIA Education Foundation in 2010. According to tax records, Venator's base compensation was just $377,157 and while he received no bonuses, Venator did earn $444,266 under "other reportable compensation" along with retirement and other nontaxable benefits.

Venator's replacement as CEO of the CompTIA Education Foundation was Charles Eaton, a former executive at the Association for Professionals in Infection Control and Epidemiology (APIC), who had also served as vice president of member relations at the Consumer Electronics Association. Eaton's total compensation for 2010 was $161,168 -- far below Venator's.

These days Venator is retired and living with his wife in an expensive, 400-year-old hacienda in Valladolid, Mexico, called Casa de Los Venados. Venator bought the 18,000-square-foot estate in 2000 and over the years has renovated the historic building, adding a pool, Jacuzzi and a gym, while also stocking it with classic Mexican folk art.

Venator turned his home into something of a tourist attraction, offering daily guided tours of the historic estate and its art collection. The Venators technically don't charge admission, but they do ask guests for donations of at least $5, which Venator said goes entirely toward local charities.

"We open the house every single day at 10 a.m. and give tours and let people see the art. We donate the proceeds to local health charities for sick children," he said. "We've given over $5,000 to [area hospital] Clinic San Lucas in the last two years."

Venator takes issue with the characterization that he's wealthy or is living an extravagant lifestyle. Much of his free time now, he said, is spent marketing Casa de Los Venados and raising money for children's health causes in the community. He acknowledges he was paid a lot of money for his time with the organization but insists the money was always earned and properly approved by the board.

"Everything that was done was aboveboard," Venator said. "I did a pretty good job, and the CompTIA boards I served over the years felt the same."